Sticking With the Family Formula

Erik Nordstrom can't resist sharing a letter from a customer.

"She wants me to promise her that we will never get into the coupon game. She feels a loyalty to the company," he said during an interview in his office.

Erik's mission as president of stores is to maintain the distinctive Nordstrom tone and store experience, and one way to do that is by avoiding the price-promoting epidemic in retailing. "We don't rely on promotions, be it one-day sales, coupons or ‘friends of friends' sales. We think our regular pricing has to have integrity."

Nordstrom runs only three sales a year, he said — two clearances and the anniversary sale in July, which is a pre-fall season sale that lasts for 17 days. The kickoff of the anniversary sale, which is always a Friday in the middle of July, is Nordstrom's biggest volume day, even bigger than Black Friday. "The first day of the sale is driven by our selling people calling their customers. We have customers who plan their summer vacations around our pre-season sale," he said.

The event takes on a life of its own; some stores stage fashion shows or trivia contests, Erik said, to drive traffic.

Due to its regular-pricing posture through most of the year, Nordstrom's quarterly revenue count tends to be more even than the highs and lows of other stores.

Aside from the lack of price promoting or discounting, Nordstrom sets itself apart in other ways. A lot of it is very visible to customers.

"You can see things in our stores," Erik said. "The product density is less. It's about wider aisles and being more open...The overarching theme that served us well is really about getting in touch with our roots as a fashion specialty store."

Unlike Neiman Marcus or Saks Fifth Avenue, "in general, there are no vendor shops, outside designer," which helps Nordstrom project its own personality.

The retailer also is getting sharper. Recent openings, including a store in the Gardens mall in West Palm Beach, Fla., open about two months, exhibit a greater demarcation between departments, which are organized by lifestyle, such as Savvy for contemporary and Brass Plum for junior. "There's increased definition of fixturing, carpeting, back-wall displays, even dressing rooms." There's also "less merchandise on display, and we turn it faster."The Nordstrom store experience is about being "aspirational and upscale," Erik said, "so people feel they are treating themselves, but we are not looking to do it in a super-exclusive way. We want to be inclusive, not exclusive."

It's somewhat like Starbucks, he said, another Seattle retailer. "It's a great experience, but very attainable."

As for the store rollout, there's nothing formulaic about it. Nineteen openings are slated through 2010. "Plenty of places look good on paper and we say no," Erik said. "Plenty of places look marginal and we say yes. Pete [Nordstrom, president for merchandising, Erik's brother] and I visit every location before we sign off."

Gut instinct about a location figures as heavily in the decision process as the hard-core demographics and statistics that landlords feed retailers. "We can really be selective," Erik said. "We are saying no to really decent opportunities. That's because we come across better opportunities."

"The biggest market we are not in is Boston. To be able to open four stores there is exciting." It begins with the Natick, Mass., unit in 2007.

Manhattan remains untapped. "No doubt it will take more creativity on our part and on the developer's part," he said.

He also noted the company is spending $100 million in renovations over the next three years.

Asked if Nordstrom is in a seminal period, he said it's difficult to say because there have been other defining moments, One was in 1978, when the company broke out of its northwestern realm by opening a store in California and saw tremendous growth in the Eighties in that state.

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